Local Government Funding

Lord Barwell Excerpts

Monday 6th December 2010 Commons Chamber

[Andrew Gwynne]

For the past 13 years of the Labour Government, Stockport received additional money because of those deprived Stockport wards. It is a shame that the Liberal Democrat council chose not to spend the money in Reddish and in those wards.

It is true that we are facing one of the worst rounds of spending contraction ever experienced. That is likely to have a massive impact on every part of our public services, not just local government. However, we should not forget that local government provides, or co-ordinates, the delivery of some of the most valued public services—from children’s services to adult social care, from leisure, parks and libraries to schools and from fixing roads and pavements to public transport and refuse collection.

I am concerned about how the cuts are being implemented and their unfairness to more socially deprived areas. My constituents in Tameside and Stockport accept that there needs to be a reduction in public spending and that local government must play its part, but it is certainly difficult to see any fairness—as was promised in the comprehensive spending review—in the fact that some councils in the most deprived areas will have reductions in their budgets next year of, as has been suggested, up to 25%, 30% or more, whereas other councils—many in the south—will feel the impact of those reductions far less.

Research from SIGOMA, a group of 44 metropolitan and unitary authorities outside London—I know the Secretary of State’s view on that grouping—demonstrates that the councils that expect to be worst hit by the CSR are in the 20% most deprived areas. Clearly we know that the cuts will hit places such as Denton and Reddish very hard indeed.

Tameside council is planning for a total funding reduction of around £100 million over the next four years—a massive amount for one fairly small metropolitan borough to lose. We also know the cuts are being front-loaded, so Tameside council will need to save more than £37 million next year. It must save more in one year than it has saved over the past seven, despite making extremely tough choices to meet its Gershon savings. There is very little meat left on the bone. These cuts will hurt our services. Ultimately, the proposed cuts will mean a reduction in Tameside council’s work force of about 800 over the next four years.

[Gavin Barwell (Croydon Central) (Con)]

The hon. Gentleman is speaking up for his constituents, and he is to be applauded for that. He says that there is very little meat left on the bone in Tameside. What will he say to my constituents when they realise that under the previous Labour Government Tameside received a real-terms increase over the past five years, whereas Croydon received a real-terms cut of 3%?

[Andrew Gwynne]

I am not sure that those figures are correct. However, if that is what the hon. Gentleman says, people in Croydon should vote Labour. When combined with the new year rise in VAT, it is clear these cuts and the impact they will have on public services mean that those people with the least—especially the elderly and most vulnerable—will pay more and lose the most.

I have had sight of recent research showing the overall impact of the Government’s spending plans on local authorities, including Tameside. It calculates that from 2014-15, as my constituents make their contribution to the Government’s deficit reduction, Tameside’s economy will lose £50 million a year. It also shows that residents of working age will, on average, contribute £39.79 per person compared with the Chancellor’s constituency of Tatton, where residents will contribute only £22.62 per head, or those living in Kensington and Chelsea, who will contribute just £5.91 per head.

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[Heather Wheeler]

That is a really interesting point. All I know is that I have lost £2 million in South Derbyshire. I do not know whether it should have been £2.5 million or £0.5 million; I know that I lost £2 million.

[Gavin Barwell]

I should just like to put the record straight, following that previous intervention. According to the House of Commons Library, two of the local authorities that did worst, along with my own council, over the past five years under the previous Labour Government were Newcastle upon Tyne and Liverpool.

[Heather Wheeler]

That was a very helpful intervention. Fortunately, someone has some facts at their fingertips, rather than the usual pure emotion.

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[Gavin Barwell]

The hon. Gentleman is making a powerful case against funding being cut in deprived areas and the money going to affluent areas. If I told him that, according to the Library, Liverpool, like my authority, had one of the lowest increases of the past five years—a 3% cut from the Labour Government—and that the biggest increase went to Rutland, which got a 25% increase, what would he say about the Labour Government’s record over the past five years?

[Steve Rotheram]

I would say that it is not just about one specific funding stream; it is about an overall package. Liverpool benefited greatly under the Labour Government —so much so that the hon. Gentleman’s friends on the Liberal Democrat Front Benches used to say that the Lib-Dem controlled Liverpool city council was a flagship council because it had got so much money from the Labour Government. Don’t try to give me lessons about what happened in Liverpool, mate!

In June, the Department for Communities and Local Government wrote about the immediate front-loaded and ongoing savings to be made by local authorities that

“the Government is satisfied that it has adopted a fair approach to making the necessary reductions.”

In the comprehensive spending review, the coalition promised to

“limit as far as possible the impact of reductions…on the most vulnerable in society, and on those regions…dependent on the public sector”.

The Government never tire of reminding us that we are all in this together, in the new age of austerity, and insist that their belt-tightening is fair and progressive. So much for the rhetoric. The reality is that the proposed one-size-fits-all local government finance settlement, with its removal of ring-fenced funding for poorer regions and its top-slicing of the formula grant, is set to hit the poorest councils the hardest—none more so, unfortunately, than Liverpool city council.

Whether the Secretary of State likes SIGOMA or not—he did question its findings—its research shows that of the 20 worst-hit local authorities financially, all but two are in the top 20% of most deprived areas in the country. Conversely, of the 20 councils that do best out of the comprehensive spending review, all but two are in the top 10% of wealthiest local authorities. The SIGOMA report concluded:

“The current finance settlement perpetuates inequality rather than allowing areas to operate on an equal footing.”

SIGOMA is not alone in its findings. Following its own analysis, the TUC has affirmed that the Government’s budgetary policy

“will risk the recovery, increase inequality and threaten social cohesion”.

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[George Hollingbery]

Indeed. It is difficult to make plans at this late stage, but we have known about the cuts for some considerable time. Most councils have known for at least two or three years that the economic times are difficult. My local councils have been planning for such changes for two or three years. Frankly, it is no great excuse to say at this stage that we do not yet know the level of the settlement. We all know—and we have known for a long time—that it will be difficult.

[Gavin Barwell]

Did not the previous Government’s 2009 pre-Budget report set out clearly that public expenditure in unprotected Departments was going to fall by 25% over the course of this Parliament? Given that local government was not one of those protected areas, any local authority would therefore have been aware that such reductions were coming, whoever was in power.

[George Hollingbery]

My hon. Friend clearly demonstrates that there is no real excuse for local authorities pretending that we cannot do anything because we do not know how big the cuts will be. Straightforwardly, we know that there will be cuts, and we know that they will be serious.

There are any number of innovative third-sector partners out there doing a fantastic job. I would like to pick just one example from my local area—although it works out of the constituency of the Financial Secretary to the Treasury, my hon. Friend the Member for Fareham (Mr Hoban)—which is the You Trust. I recently met Nicola Youern, who runs the trust. The You Trust has a fantastic way of dealing with new cases, which Hampshire county council brings to it, of difficult-to-house young people. The trust first asks, “What can we teach you to do for yourself?” and then asks, “What can we teach your relatives and friends to do for you that will stop us having to intervene?” The trust goes through that sequence of trying to help people, before saying finally, “The only way we can deal with this is through a public sector intervention.” If there were more of that thinking across the public sector, we would get better results for less money.

I also welcome one or two changes that I think—I hope—will shortly appear in the localism Bill. The reporting changes are clearly very welcome. As the performance management portfolio holder for Winchester city council until recently, I was in charge of producing the statistics that we had to relay to central Government, almost none of which was used to create real change in the council but almost all of which were incredibly burdensome to collect.

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[Gavin Barwell (Croydon Central) (Con)]

Before I was elected to this House, I had the privilege to serve as a councillor in Croydon for 12 years, to be a cabinet member responsible for a number of different service areas, to work with senior council officers and to meet council staff who were delivering services on the front line. I completely understand their feeling that it is deeply unfair that some of them are going to be asked to pay the price with their jobs of dealing with the mistakes made in our banking system and the mismanagement of the public finances by the previous Government.

I speak in opposition to the motion not because I think the concerns expressed by Labour Members are misplaced or phoney—Members have spoken with passion about this issue—but because they fail to recognise that the Government’s approach is very similar to the one a Labour Government would have adopted. In opening, the shadow Secretary of State said that the coalition Government were going deeper and faster than a Labour Government would have gone. Let us take each of those assertions in turn.

The suggestion that we are going deeper is palpably untrue. Labour policy was to get rid of the structural deficit over two Parliaments; the coalition’s policy is to get rid of it over one Parliament. There is no difference whatever about the size of the cuts; there can be no argument whatever about that.

As for speed, let us look at the previous Labour Government’s policy, as set out in the pre-Budget report of 2009. According to the Institute for Fiscal Studies, it meant reductions in non-protected Departments—the Labour Government were going to protect health, education and Sure Start—of 25%. If we look at what the coalition Government have delivered, because of the cuts in the welfare budget, some of which Labour Members perfectly reasonably wish to oppose, we see an aggregate 19% reduction in the non-protected departmental spend. In other words, the pace of change for cuts in non-protected Departments in this Parliament is slower under the coalition Government than it would have been under the plans of the previous Government.

The first two lines of the Opposition motion seek to make capital out of the fact that the reductions that local government is being asked to make are larger than those demanded of central Government. It is nonsense for the Opposition to criticise us on that basis because Labour policy was to protect the NHS, the Department for International Development budget, the schools budget and the Sure Start budget. If they are to be protected, it is an obvious consequence that the average reduction across central Government is going to be lower than the reduction in local government, which the Labour Government had not chosen to protect.

I have been a Member for just over six months. During that time, I have had to support a number of measures that, in an ideal world, I would not support. Time and again I hear from Labour Members that they do not agree with our proposals: they do not agree on tuition fees; they do not agree on the mobility component for people in residential care who receive disability living allowance; they do not agree on local government funding; and they do not agree on cutting the teaching grant for universities. It is all very well for Labour Members to tell us all the things with which they do not agree, but that has no credibility unless alternatives are advanced. I have yet to hear from the Opposition one area where they believe that the coalition Government are not cutting enough. They have not told us that instead of reducing local government spending or teaching support for universities, alternative cuts can be made that the Opposition are prepared to announce. Until they come up with an alternative package, their objections have no credibility.

[Tom Blenkinsop]

One small but significant point relates to fiscal policy and taxation. This Government have made large promises about imposing greater levies on bankers and other such people, but they have quickly run away from them. Labour Members would look to have a far more stringent regime to hold those types of people to account.

[Gavin Barwell]

I note that the coalition Government introduced a levy on banking, which the previous Government did not. If the Opposition want to propose tax increases additional to those announced by the Chancellor, we should hear what they are and discuss them. That is a perfectly reasonable basis on which to debate.

The second main theme in the motion is fairness, which is a perfectly reasonable test. I would like to raise two issues. First, Labour Members have quoted figures, expressing the concern that the authorities most dependent on Government funding will face the most significant reductions in grant. Conservative Members have been concerned about some of the phraseology used, particularly about the implication that these decisions have all been made. They have not. There is certainly an issue that the Government need to look at, and I believe that the Secretary of State said that he was aware of it. If we just salami-slice the Government grant going to each council, that will have a differential impact on the spending power of local authorities around the country. In the interests of fairness, the Government need to address that problem. Labour Members, however, should not have given the impression that these things are all done and dusted; they are not. We have not yet had the statement, and the Minister is not in a position to give the assurances he has been asked to provide until that statement is made.

I would also like to look at the issue of fairness as it relates to the record of the previous Labour Government. I want to make a non-partisan point. People allege that money was shunted from the south to the north, or that under the Tory Government Westminster and Wandsworth were favoured. The reality is that the system is completely broke. If we look at the figures for unitary councils, the London boroughs and the metropolitan districts under the last five years of the Labour Government, we see that about 30 authorities—my authority was one of them—had a real-terms cut in funding of more than 2%. It is not all outer London boroughs, however; it is a completely random mix of authorities, including places such as Newcastle-upon-Tyne and Liverpool.

At the other end of the scale, we see that Blackpool received an increase of nearly 11%, Telford and the Wrekin 13.3%, Torbay 15.7%, Blackburn 16.7% and Rutland an incredible 25.8%. It is very difficult, I think, to discern a pattern between those authorities. I would like the shadow Minister to explain in her summing-up speech why Croydon gets a 3% real cut, but Rutland gets a 25% increase. [Interruption.] This happened under the Government of the hon. Member for Worsley and Eccles South (Barbara Keeley), so, with respect, the explanation should come from those who were responsible for the changes.

In applying the reductions, it is important that the Government take account of the authorities that have already seen a real-terms reduction in their funding, as opposed to those that saw a period of largesse under the previous Government. I happily acknowledge that local government as a whole did see real-terms growth in funding under the previous Government, but that did not apply to all individual local authorities. It seems wholly unreasonable to impose the same reductions on authorities that have already had to make cuts in comparison with those that have seen significant increases in funding.

I reiterate the point made in the Local Government Association briefing, which many Members will have received. The same point about fees and charges was made by the hon. Member for Bermondsey and Old Southwark (Simon Hughes). For a number of local authority services, the charges that local authorities are allowed to levy by statute do not cover the costs. One way for the Government to help local authorities is by giving them the freedom to increase some of those charges. None of our constituents will welcome paying higher fees, but they might well prefer that option to reductions in the vital public services on which they depend.

Let me pick up another point made by the hon. Member for Bermondsey and Old Southwark. He was very concerned about cuts in non-statutory services such as support for the voluntary sector and youth services. My local authority is having to consider those services. I hope the Minister will tell us that the Government will think again about what is statutory and what is non-statutory. Surely if we all now believe in localism and believe that local authorities are best placed to make choices, we should allow authorities much more flexibility in delivering services locally. If we do not, many of them will not be able to touch a large chunk of their spending because it is statutory, and the reductions will be concentrated in the voluntary sector.

In a report published before the general election, the Institute for Fiscal Studies spoke of measures to reduce the deficit. According to the IFS,

“most likely it will come from a combination of reductions in the quality and/or quantity of public services provided and families being made directly worse off financially through cuts to welfare benefits and increases in tax. Efficiency savings alone will not be enough to fill the deficit.”

Members on both sides of the House must stop pretending that all that can be done easily. Whoever is running the country—whichever party forms the Government—the job of deficit reduction will be painful. We should stop engaging in a feigned debate about whether it is ideologically based, because it would confront whoever was governing the country. We should focus on the changes that Government can make to support those in the front line who are having to make difficult decisions so that they can do the best job in protecting the vital public services on which all our constituents depend.